India offers 51% FDI in insurance auxiliaries

Revised offer for services negotiations at WTO.

India has offered to allow up to 51 per cent foreign investment in insurance auxiliary services as part of its revised offers for services negotiations at the World Trade Organisation. This it has done while binding its commitment in insurance underwriting to 26 per cent.

Also, India has said foreign banks will not be denied a licence if the share of their total banking assets (on and off balance sheet) in India exceeds 25 per cent. This was 15 per cent in India's initial offer.

While FDI in the banking sector has been capped at 49 per cent, the government has offered to bind asset management services at 51 per cent. The FDI limit for banks providing services related to participation in issues of all securities, underwriting and placements has also been increased from 51 per cent to 74 per cent.

For foreign financial services companies, including banks, the FDI limit in "factoring, venture capital, financial leasing, provision and transfer of information, financial data processing and related software by suppliers of other financial services and financial consultancy services, has also been enhanced from 51 per cent to 100 per cent," the government has said.

Wholly owned subsidiaries of foreign banks in India will now be allowed to set up 20 branches in a year against the earlier limit of 15.

Computer and related services is another area where improvements have been made by relaxing the earlier requirement of obtaining a no-objection clearance from the Foreign Investment Promotion Board for existing ventures in India. Further, a new sub-sector on data preparation services has been included.